According to Britain’s Buy to Let Report (fifth edition) released by Kent Reliance, the number of private rental households in the UK by the end of Q3 of 2016 increased by around 300,000 versus the same period in 2015. Nationwide, however, tells a different story, reporting that they lent £100 million less in the six months to September 2016 versus to September 2015 in the buy-to-let market.
So, is this the end of buy-to-let? And after dire predictions in 2016 how is 2017 really looking?
While both figures may be accurate – the total number of private rental households could still have risen despite lower overall lending – it does suggest that there has not been a largescale bail out by landlords nor a huge slow-down in borrowing overall.
Nationwide’s reduction equates to only 3.4% against their overall lending figure of £2.9 billion in the six months to September 2015. Furthermore, with house prices slowing in 2016, borrowing figures even for the same number of mortgages wouldn’t necessarily increase at the same rate as previously.
This is in stark contrast to the dire predictions made about the sector at the beginning of 2016 as many mainstream publications wrote about the death of buy-to-let.
Considering the various changes to legislation made by the Government, (including tax changes which will only start to come into effect this April), these predictions were not without merit or basis. A strong return is definitely more difficult to come by.
That said; some buy-to-let landlords are rolling with the punches and looking for different ways to do things. This includes transferring property deeds into the name of lower-earning spouses or relatives but also the incorporation of limited companies to limit the tax implications.
But take heed; neither are a perfect option. If you do consider setting up a business through which to manage your buy-to-let investments, there could well be future tax implications and, indeed, immediate issues around capital gains tax (The Telegraph has written a brief overview of things to consider which is useful as an introduction here).
On the face of it, 2016 predictions may have been ahead of their time but they certainly served a purpose in encouraging those of us who buy-to-let to consider how we manage these investments.
Have you made any changes to how your buy-to-let properties are set-up in the wake of announced changes? Would you consider a limited company approach? How nervous are you about the changes coming into effect in April this year?
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